Check cashing fees gets attention of state Senate Banking Committee

David Lazarus has yet another update
on the issue of payroll check cashing fees charged by California banks. David's 2nd
column
on this issue (Wed. 03/17) attracted the attention of Sen. Dean Florez, chairman of the
state Senate Banking Committee:

"(S)tate legislators are alarmed by a sudden firestorm over bank check-cashing fees
and the thousands of California firms believed to be breaking the law by allowing
the fees to be charged."

A hearing has been scheduled for March 31, where representatives of all interested
parties will be called upon to testify. Sen. Florez said, "Legislators will move
quickly to ensure that California labor laws are enforced." One possible solution,
according to Florez, is to amend existing statutes to require that employers pay any
such fees on behalf of workers.

John Withers, who runs a chain of seven hair salons stretching from San Jose to
Santa Rosa, is worried he's violating the law because Bank of America processes
paychecks for his 65 employees. Withers said he contacted Bank of America after
reading about the situation Wednesday and asked what the bank was doing to look
after its business clients. "They basically said that they had no liability so
it wasn't their problem," he recounted. "They said that this was their fee, and
they plan to stick with it."

Bank of America currently handles the $1.2 billion annual payroll for the city of
San Francisco's 27,000 employees. Bank of America told city treasurer Susan Leal
that it wanted to impose the $5 fee on all city workers who did not have accounts
at Bank of America before the fee was introduced in August of 2002. According to Leal,
"I told them there was no way in hell I was going along with that. And they immediately
backed down."

Similarly, Leal said Wells Fargo is bidding to take over San Francisco's payroll
processing and that officials from the bank recently declared their intention to
levy a $5 fee on all non-account holders working for the city. "I told them that
if they did, it would be against our contract. And they backed down too."

In David's first article,
Wells Fargo regional president Lisa Stevens said that "People are free to bank wherever
they choose." While she was talking about individual customers, her statement applies
equally to business customers. Business customers may soon have a huge financial
incentive not to bank with Bank of America or Wells Fargo if the banks don't wake up,
and it would serve them right if business customers took their business elsewhere.